CU-BCOM-SEM-V-Corporate Strategy-Second Draft

management techniques. It has become an attractive management tool to reformers, and it also instils accountability with regards to the organisational management. Bovaird argue that an organisation without a strategy does not have direction and lead to being incompetent. It is not an exaggeration to say that, the use of strategic management particularly in this era, when public organisations are considered underperforming and uneconomical in their use of public resources, could, among other things, help to enhance public organisations’ image and legitimacy. The general mood of the public has been that public managers must ‘do more with less’, the situation that requires strategic thinking in order to ‘reduce wastes’. Berry noted that widespread recession of the early 1990s precipitated the need to ‘hold down the size of the government’ thereby forcing political leaders to initiate public sector reform process that takes strategic management to its heart. Response mechanisms have emerged within the private market to meet these recent challenges but government organisations have been slower to respond. This is understandable, given fiscal constraints and the bureaucratic process axiomatic to governments. However, a new approach, which incorporates modern strategic management tools, is necessary for the public sector to achieve improved performance and overall service quality. While current public policy models have certainly started to reflect a shift away from traditional thinking about organisational design and public management, a systematic process for creating and sustaining improved performance that reflects changes in the environment is clearly absent. There is enough confirmation which suggests that change is affecting the public sector, and this change is manifest in the metamorphosing structures and processes of many public organisations. The guiding principles in any strategic management process, whether in the public or private sector, are about understanding what changes are needed, how to implement and manage these changes, and how to create a roadmap for sustaining improvements that lead to better performance. The difficulty in strategic management is the challenge of laying a foundation for success in the future while meeting today’s challenges. What makes a good strategy? If you ask a collection of management gurus and you’ll get a variety of answers. Some say that you need a vision. Others emphasize focus on your core competencies. Still others would insist that you innovate your business model and on it goes. There is also a divide on who should formulate strategy. While some hold that it is a management function, others believe that it should emerge from the bottom-up. Often it is developed by high priced consultants who specialize in strategy. Strategy is about making sure that your organisation arrives where you want it to at a given time. However Mint berg defined strategy as \"a pattern in a stream of decisions\" to contrast with a view of strategy as planning while McKeown argues that \"strategy is about shaping the future\" and is the human attempt to get to \"desirable ends with available means\". Kvint defines strategy as \"a system of finding, formulating, and developing a doctrine that will ensure long-term success if followed faithfully”. When there is uncertainty in the organisation, strategy serves as an organisational compass, pointing the direction to where we need to go without disregarding where we are or where we've been. Strategy is a crystal ball of the organisation, around which all of the 51 CU IDOL SELF LEARNING MATERIAL (SLM)

elements of the business can focus and rally. Johnson and Scholes define strategy as \"Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations\". Strategy is an action that managers take to attain one or more of the organisation’s goals. Strategy can also be defined as “A general direction set for the organisation and its various components to achieve a desired state in the future. Strategy results from the detailed strategic planning process”. A strategy is all about integrating organisational activities and utilising and allocating the scarce resources within the organisational environment so as to meet the present objectives. 3.2VISION Vision is future-oriented and describes where an organization would like to be positioned in the market in 5, 10, 15, or 20 years’ time. It is a goal state embodying a long-term ambition of where an organization would like to be in the future relative to its competitors. Organizational vision is normally expressed through a simple one-line vision statement. These types of statement offer a strategic attainment goal that may be somewhat ideal or normative relative to real-world constraints, but offers inspiration to the organization to overcome barriers in a concerted effort. In that respect, vision statements are key drivers of organizational innovation, the commitment and motivation of employees, effectiveness, and success in the competitive arena. What is the origin of organizational vision? Although vision statements may originate with key founders or visionary leaders, many scholars view vision as originating from organizational culture. Noting the connection to ethical values, the authors Larwood, Falke, Kriger, and Miesing regard vision as a pattern of organizational values that underlies a unique visionary blueprint for an organization’s future. The connection of vision to ethics is indeed a prominent and strong one because the values of the organization are the foundation of its drive and vision, explaining what that drive seeks to attain. Ethical values of an organization may, for example, include autonomy, innovation, value, efficiency, or market leadership. Clearly these core ethical values underlie and support a vision statement because many of them are expressed in it as goals. The core ethical values of an organization are essential to determining how it sees itself in the competitive marketplace, and its strategic strengths become the very building blocks of a vision statement. According to Bowen, values describe the core beliefs that guide every decision and offer a priority order for consideration. The organization’s core ethical values support both its vision and mission. In addition, many ethical values are abstract constructs by nature so they pair well with the more abstract and future-oriented qualities of a vision statement. If a vision statement is not expressed by a founder or leader, how does it arise, and who implements it? The executive level or senior management normally takes the lead in determining or refining organizational vision because of its close connection to strategy. 52 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 3.1: Articulating a Vision Truly great companies understand the difference between what should never change and what should be open for change, between what is genuinely sacred and what is not. This rare ability to manage continuity and change – requiring a consciously practiced discipline – is closely linked to the ability to develop a vision. Vision provides guidance about what core to preserve and what future to stimulate progress toward. But vision has become one of the most overused and least understood words in the language, conjuring up different images for different people: of deeply held values, outstanding achievement, societal bonds, exhilarating goals, motivating forces, or raisons d’être. We recommend a conceptual framework to define vision, add clarity and rigor to the vague and fuzzy concepts swirling around that trendy term, and give practical guidance for articulating a coherent vision within an organization. It is a prescriptive framework rooted in six years of research and refined and tested by our ongoing work with executives from a great variety of organizations around the world. A well- conceived vision consists of two major components: core ideology and envisioned future. Core ideology, the yin in our scheme, defines what we stand for and why we exist. Yin is unchanging and complements yang, the envisioned future. The envisioned future is what we aspire to become, to achieve, to create – something that will require significant change and progress to attain. Core Ideology Core ideology defines the enduring character of an organization – a consistent identity that transcends product or market life cycles, technological breakthroughs, management fads, and individual leaders. In fact, the most lasting and significant contribution of those who build visionary companies is the core ideology. As Bill Hewlett said about his long-time friend and business partner David Packard upon Packard’s death not long ago, “As far as the company is concerned, the greatest thing he left behind him was a code of ethics known as the HP Way.” HP‘s core ideology, which has guided the company since its inception more than 50 years ago, includes a deep respect for 53 CU IDOL SELF LEARNING MATERIAL (SLM)

the individual, a dedication to affordable quality and reliability, a commitment to community responsibility, and a view that the company exists to make technical contributions for the advancement and welfare of humanity. Company builders such as David Packard, Masaru Ibuka of Sony, George Merck of Merck, William McKnight of 3M, and Paul Galvin of Motorola understood that it is more important to know who you are than where you are going, for where you are going will change as the world around you changes. Leaders die, products become obsolete, markets change, new technologies emerge, and management fads come and go, but core ideology in a great company endures as a source of guidance and inspiration. Core ideology provides the glue that holds an organization together as it grows, decentralizes, diversifies, expands globally, and develops workplace diversity. Think of it as analogous to the principles of Judaism that held the Jewish people together for centuries without a homeland, even as they spread throughout the Diaspora. Or think of the truths held to be self-evident in the Declaration of Independence, or the enduring ideals and principles of the scientific community that bond scientists from every nationality together in the common purpose of advancing human knowledge. Any effective vision must embody the core ideology of the organization, which in turn consists of two distinct parts: core values, a system of guiding principles and tenets; and core purpose, the organization’s most fundamental reason for existence. 3.3 MISSION Mission is the pursuit of a goal that is unique to an organization’s competitive advantage its specific strengths and offerings relative to competitors while again emphasizing its values. The best mission statements are general enough to drive the strategic pursuit of numerous organizational goals and a plethora of organizational objectives, yet are specific enough to focus and prioritize organizational activities and resources. Unlike vision statements, mission statements are normally several sentences long. Mission statements intend to answer the question why do we exist? Mission statements help management to organize the hierarchy of priorities that an organization must face in daily and long-term operations. Cornelissen used a stakeholder-values perspective to explain mission: “A mission is a general expression of the overriding purpose of the organization, which, ideally, is in line with the values and expectations of major stakeholders and concerned with the scope and boundaries of the organization” A mission is often referred to with the simple question What business are we in? Statements of core values and more specific goals and objectives often follow mission statements. The core ethical values of the organization shape not only its vision but also its mission: what it seeks to accomplish, what is desired or rewarded in the organization, and where the efforts of each organizational member should be directed. Focusing on the core competitive advantage of a business organization is key to creating a good mission statement. What is it that makes the organization unique? How is it different from competitors? What are the strengths that it brings to the marketplace? What is the distinguishing value of its product or service? In perhaps the most canonical publication on mission statements, Pearce 54 CU IDOL SELF LEARNING MATERIAL (SLM)

wrote that the company mission is a broadly defined, but enduring, statement of purpose that distinguishes a business organization from other organizations/firms of its type and identifies the scope of its operations in product and market terms. Abrattsaw mission as a distilled form of corporate philosophy that shapes strategic management. As with vision statements, mission statements must be based on the ethical values of the organization. Those values normally include concepts such as honesty but become more specific in a mission statement. For example, do the organization’s ethical values drive behaviour toward innovation or cost efficiency, prestige market leadership or low-cost volume, high-value consistency or individual tailoring, or efficacy versus luxury? Further, which stakeholders should the organization prioritize? In its individual industry and market position, should its prior commitment be to consumer publics, business stakeholders, employees, or financial stakeholders? A well-organized mission statement can clarify the organization’s competitive advantage, management strategy based on core values, strategic stakeholders, and priorities. In a management core of competing perspectives and limited resources, a well-defined mission statement itself can add to competitive advantage. To illustrate this, imagine the different management priorities that would organize resources and decision making between these two divergent mission statements in agriculture: We work diligently to be the world’s low-cost leader in reliable, productive, and disease-resistant crops, versus We engage in the highest level of innovative research and outside-the-box thinking for vast advancements in each crop that we modify. In this illustration, Organization A would prioritize cost efficiency, reutilization, building upon the patents of others, and creating a reliable product with much consumer value built in. It would likely be a mid-to-late market entrant working on crops that are in steady demand. Conversely, Organization B would spend a great deal more time and resources on the laboratory science needed to alter specific crops and would be considered a market pioneer with a unique and more expensive product. Additionally, the core ethical values built into Organization A stand in contrast with the core ethical values of Organization B, Incentive structures in each organization would be different and employees would experience greater rewards by working in concert with organizational values. This example illustrates how even a simple mission statement can change the overall priorities and operations of an organization. Some mission statements are parsimonious, such as this example from Bose Corporation. We have a simple mission: think of better solutions, create better products, and help people enjoy the things they love. Such simple mission statements are often followed by an announcement of core values and guiding principles, such as, maybe the most important principle we live by is that innovation is not a destination, but a journey requiring new ideas from new players. Other mission statements are more complex, composed of several bullet points or a few short paragraphs. The current trend in industry is for more detail in mission statements. There are nine detailed categories that mission statements often discuss, specifying general goals: 55 CU IDOL SELF LEARNING MATERIAL (SLM)

The key to a successful mission statement is its ability to focus an organization’s priorities, decision making, and resources on the core components that drive its competitive advantage. A mission statement should help to hone the operations of an organization by minimizing or eliminating extraneous activities, allowing focus and teamwork, and driving organizational priorities and activities. There are several factors that go into the construction of a mission statement, each discussed below:  Founder vision;  Vision statement;  Research (internal stakeholders; external stakeholders and publics);  Analysis of core competencies in relation to competitive environment;  Environmental factors (regulatory, industry, technological, etc.);  Leadership and management style; • core ethical values. It is likely that an organization’s founder or key leaders will have articulated their idea of a vision or mission statement to drive the organization. Often, that idea is enough of a starting point but, as with vision, internal stakeholders should be heard and have a voice and real input in creating the mission. The vision statement of the organization, if one exists formally or informally, is a wonderful starting point for articulating a more specifically defined organizational mission. The vision statement drives where the organization is going and what values it will use to get there, so the mission statement can build upon that foundation by articulating core competencies. Those core competencies or focus areas comprise the competitive advantage of the organization and give it the ability to prioritize resources that further it toward that goal. Research should be used to help determine, construct, or refine the mission statement. Research inside the organization with internal stakeholders should be conducted, employing both qualitative and quantitative formats. Qualitative research can generate in-depth understanding and answer “why” questions. It is important in the formative stages of assessing how internal stakeholders view both strengths and weaknesses of the organization. Quantitative research can be used to ascertain the extent of agreement with concepts across the entire organization and among employees at all levels. It is important to include an element of the research that is anonymous to generate candid input and feedback. Several rounds of data collection may be needed to refine potential mission statements and the findings of quantitative and qualitative research. It is unlikely that there will be complete levels of acceptance and agreement among every stakeholder group within the organization, but ongoing research can incorporate many of the interests of most stakeholders. External publics and stakeholders may also be included in the research to understand how the organization is viewed from the outside by consumers, investors, etc. A good mission statement is not simply a public-opinion-created document. Senior management must analytically scrutinize the competitive environment in which the organization operates, 56 CU IDOL SELF LEARNING MATERIAL (SLM)

seeking to identify core competencies and growth opportunities based upon the organization’s unique competitive advantage. Sometimes elements of the organization will be divested or sold in order to focus on a narrow competitive advantage. Other times, expansion becomes a part of the organization’s mission. Finance, technology, competitive market growth potential, and even the regulatory and judicial environment warrant examination for their potential impact on the organization’s mission. This portion of the analysis becomes even more complex when the organization is multinational or global. Elements of leadership style and the organization’s unique management philosophy should also be considered in developing the organization’s individual mission. How hierarchical or authoritarian is the organization versus how decentralized or participative? Often the industry of a company lends itself more to one style than another manufacturing firms, for instance, are often authoritarian and reutilized with a high division of labour. What needs to be worked out, however, is the ideal for the industry that a specific organization belongs to when considered in concert with its competitive advantage and vision statement. Core ethical values are the foundation of everything that the organization does, including its vision, mission, and operations. Core values allow those working within the organization to agree upon what is considered good, worthy, or meritorious. They allow common goals that offer guidelines for both individual and group behaviour. Those values should be incorporated as the backbone of the mission statement to accentuate how they are being operational zed. They can also be used to help steady the organization in times of uncertainty or to help resolve dilemmas. A concise, comprehensive, specific, articulate, and strategic mission statement emerges as the result of numerous considerations, analyses, and types of research. A well-conceptualized mission statement offers numerous benefits that can help drive the organization toward success. Mission statements are practical investments in the future of an organization for a number of reasons. As discussed above, they allow the prioritization of operations and resources. Mission statements also encourage commitment and motivation among internal publics and employees, and help to foster a collaborative, team-driven environment toward common goals. A voluminous amount of research has been published that shows the relationship between committed employees and overall organizational effectiveness. A strong organizational culture, organized by a mission statement known to all and driven by core ethical values, creates more effective employees and larger efficiencies of scale and cost reduction for the organization. A motivated workforce can offer a formidable competitive advantage, and the mission statement is key to driving that team effort toward common goals. Scores of researchers have argued that an articulate and well-defined vision is essential during times of organizational change, transition, or environmental turbulence. Arguably an even greater value of mission statements is that they encourage the long-term formation of relationships with stakeholders/publics by allowing the organization to be known. A visible and often-referred-to mission statement allows both internal stakeholders and external publics to understand the priorities and rationale for management decisions. Mission statements also 57 CU IDOL SELF LEARNING MATERIAL (SLM)

have relationship outcomes because they underscore the credibility of the organization. An astute mission statement encourages consistency among management and in organizational behaviour, minimizing distractions and forays into potentially problematic decisions. When a mission statement is used to organize and prioritize operations, a consistent focus on mission emerges. That consistency allows management to be known by external publics and internal stakeholders alike. Over time, consistency allows the organization to meet the expectations of publics/ stakeholders. Ethical organizational behaviour has been conceived as a precursor to the formation of effective long-term relationships with stakeholders/publics. Given that the organization’s behaviour is ethical or values-driven, meeting the expectations of publics/stakeholders allows trust to emerge as a valuable component of long-term relationships. Organization public relationships are built on trust, commitment, satisfaction, and shared control. Trustis arguably the most important component of relationships because it can insulate an organization from negative events, allowing it valuable time to research, explain, adapt, and recover while maintaining ongoing, trusting relationships with stakeholders. Mission statements are, therefore, an invaluable component of strategic management and a vital aid in building relationships between the organization and its stakeholders/publics Strategic use of vision and mission Although they are often confused, the distinction is clear: A vision statement addresses the question where do we want to go? Whereas a mission statement addresses the question why do we exist? Although vision statements can be seen as optional they are exceptionally helpful in organizing the future goal state or visionary aspiration of an organization. Using a vision statement strategically can help the organization in long-term planning, scenario building, issue identification and analysis, resolving ethical dilemmas, and helping to determine the best allocation of limited resources. Vision statements allow an organization to operate consistently toward a future it has defined as successful and worthy of attainment. Mission statements are not optional. It is exigent that every organization, regardless of size or industry, makes a concerted effort to research, develop, codify, and institutionalize a strategic mission statement. At that point, the mission statement must be used in discussion of managerial dilemmas, routine decision-making, and problem-solving. For example, a management team evaluating options to address a problem could pose the question which of these options best supports our mission? To help create competitive advantage and build teamwork and long-term organization–public relationships, the mission statement must become an essential fibre that is woven throughout the organization’s culture and pervades its operations. SEE ALSO: Business Strategy; Core Values; D Advantages  Provides direction: Mission statements are a way to direct a business into the right path. They play a part in helping the business make better decisions which can be beneficial to them. Without the mission statement providing direction, businesses may 58 CU IDOL SELF LEARNING MATERIAL (SLM)

struggle when it comes to making decisions and planning for the future. This is why providing direction could be considered one of the most advantageous points of a mission statement.  Clear purpose: Having a clear purpose can remove any potential ambiguities that may surround the existence of a business. People who are interested in the progression of the business, such as stakeholders, will want to know that the business is making the right choices and progressing more towards achieving their goals, which will help to remove any doubt the stakeholders may have in the business.  A mission statement can act as a motivational tool within an organisation, and it can allow employees to all work towards one common goal that benefits both the organisation and themselves. This can help with factors such as employee satisfaction and productivity. It is important that employees feel a sense of purpose. Giving them this sense of purpose will allow them to focus more on their daily tasks and help them realise the goals of the organisation and their role. Disadvantages  Unrealistic: In most cases, mission statements turn out to be unrealistic and far too optimistic. An unrealistic mission statement can also affect the performance and morale of the employees within the workplace. This is because an unrealistic mission statement would reduce the likelihood of employees being able to meet this standard which could de-motivate employees in the long term. Unrealistic mission statements also serve no purpose and can be considered a waste of management's time. Another issue which could arise from an unrealistic mission statement is that poor decisions could be made in an attempt to achieve this goal which has the potential to harm the business and be seen as a waste of both time and resources.  Waste of time and resources: Mission statements require planning. This takes time and effort for those who are responsible for creating the mission statement. If the mission statement is not achieved, then the process of creating the mission statement could be seen as a waste of time for all of the people involved. A lot of thought and time can be spent in designing a good mission statement, and to have all of that time wasted is not what businesses can afford. The wasted time could have been spent on much more important tasks within the organisation such as decision-making for the business. 3.4BUSINESS DEFINITION A business is defined as an organization or enterprising entity engaged in commercial, industrial, or professional activities. Businesses can be for-profit entities or they can be non- profit organizations that operate to fulfil a charitable mission or further a social cause. 59 CU IDOL SELF LEARNING MATERIAL (SLM)

The term \"business\" also refers to the organized efforts and activities of individuals to produce and sell goods and services for profit. Businesses range in scale from a sole proprietorship to an international corporation. Several lines of theory are engaged with understanding business administration including organizational behaviour, organization theory, and strategic management. Generally, a business begins with a business concept and a name. Depending on the nature of the business, extensive market research may be necessary to determine whether turning the idea into a business is feasible and if the business can deliver value to consumers. The business name can be one of the most valuable assets of a firm; careful consideration should thus be given when choosing it. Businesses operating under fictitious names must be registered with the state. Businesses most often form after the development of a business plan, which is a formal document detailing a business's goals and objectives, and its strategies of how it will achieve the goals and objectives. Business plans are almost essential when borrowing capital to begin operations. It is also important to determine the legal structure of the business. Depending on the type of business, it may need to secure permits, adhere to registration requirements, and obtain licenses to legally operate. In many countries, corporations are considered to be juridical persons, meaning that the business can own property, take on debt, and be sued in court. Many businesses organize themselves around some sort of hierarchy or bureaucracy, where positions in a company have established roles and responsibilities. The most common structures include sole proprietorships, partnerships, corporations, and limited liability companies, with sole proprietorships being the most prevalent. A sole proprietorship, as its name suggests, is a business owned and operated by a single natural person. There is no legal separation between the business and the owner; the tax and legal liabilities of the business are thus that of the owner. A partnership is a business relationship between two or more people who join to conduct business. Each partner contributes resources and money to the business and shares in the profits and losses of the business. The shared profits and losses are recorded on each partner's tax return. A corporation is a business in which a group of people acts together as a single entity; most commonly, owners of a corporation are shareholders who exchange consideration for the corporation's common stock. Incorporating a business releases owners of the financial liability of business obligations; however, a corporation has unfavourable taxation rules for the owners of the business. For this reason, a relatively new business structure, a limited liability company , is available; this structure combines the pass-through taxation benefits of a partnership with the limited- liability benefits of a corporation. Individual lives in a business environment which is an indispensable part of society. The essence of this is to satisfy individual wants by providing variety of goods and services 60 CU IDOL SELF LEARNING MATERIAL (SLM)

through wide networking of business activities. Lecturers teach in the lecture rooms, farmers work in the farmlands, workers work in the factories, drivers drive lorry/vehicles, shopkeepers sell goods, medical doctors attend to patients, etc. In this way, people are busy during the day and sometimes during the night depending on the nature of individual job or business. Now the question arises as to why we all keep ourselves busy day and night. The answer is to earn money that will be used to satisfy our wants by purchasing goods and services which will be produced by business organisation. Business is an integral part of modern society. It is an organised and systematic activity for earning profit. It is concerned with activities of people working towards a common economic goal. Modern society cannot exist without business. This is because business improves the standard of living of the people by providing better quality and large variety of goods and services at the right time and at the right place. Besides, business provides opportunities to work and earn a livelihood. Thus, it generates employment in the country, which in turn reduces poverty. When business environment is conducive for business organisation such business thrives well and this reduces poverty. Business improves national image of producing country by producing and exporting quality goods and services to foreign countries. By participating in international trade fairs and exhibitions it also demonstrates the progress and achievements of its own country to the outside world. Hence, a number of innovative products and services are developed through industrial research. This section has been designed to enable the readers aware of the nature, purpose and scope of business. It also recognizes the different types of business activities along with the latest developments in business such as e-commerce, etc. People around us are engaged in various activities. Nature of Business Business refers to an occupation in which goods and services are produced and sold in return of money. It is carried out on a regular basis with the prime objective of making profit. Mining, manufacturing, trading, transporting, storing, banking, and insurance are examples of business activities. For our purposes in this paper, the general definition of Timms was adopted. He defined business to mean, a commercial enterprise or establishment that trades in goods or services. However, the complication of using a general definition emerges again. For instance, the objective of ‘trading’ does not have to be for profit. Therefore the argument can be made that non-profit making organisations can also be regarded as businesses, at least a certain type of business. This would include public sector organisations, since there is increasing demand for these organisations to perform and be managed like profit-making business. Business can also be regarded as any economic activity which must focus on continuous and regular production and distribution of goods and services for the purpose of meeting the needs of people in the society. The implication of this is that business must involve continuous production and distribution of goods and services with the intention of making profits. Business is the activity of an individual or group of individuals in producing 61 CU IDOL SELF LEARNING MATERIAL (SLM)

and distributing goods and services to customers. Stephenson defines business as “The regular production or purchase and sale of goods undertaken with an objective of earning profit and acquiring wealth through the satisfaction of human wants.” According to Dicksee, “Business refers to a form of activity conducted with an objective of earning profits for the benefit of those on whose behalf the activity is conducted.” Lewis sees business as “Human activity directed towards producing or acquiring wealth through buying and selling of goods”. He considered it as an economic system in which goods and services are exchanged for one another or money, on the basis of their perceived worth. It therefore means that every business requires some form of investment and a sufficient number of customers to whom its output can be sold at profit on a regular basis. Besides, business organisation can be defined as: an entity that is both commercial and social, which provides the necessary structures to achieve the central objective of trades in goods or services. There is need to understand that Institutions or organizations whose primary objective is profit-making are generally known as business enterprises. Aremuposited that the success of any business regardless of its size depends on how well its management is able to plan. He further stressed that one of the most serious operational problems of business is lack of effective and formal planning. The seriousness of this problem is underlined by the number of businesses failure every year. It is equally important when discussing nature of business to extend discussion on the various forms of business. Hence, this section of this book focused on the most common forms of business organisation particularly in Nigeria business environment, functions of business, purpose of business, scope of business, beneficiaries of business and stakeholders of business. 3.5 STRATEGY Strategy is a plan of action to achieve short, middle and long-term desired goals. There are generally three types of strategies in business. The corporate strategy defines the strategic goals of the overall company. The second type of strategy, the business strategy, establishes the strategic goals for a business unit. The functional strategies are about the strategic goals to achieve the business goals, and to keep developing the functional area itself. Goals are important for organizations to determine the future direction of a company. A good strategy always stems from a thorough analysis of the company’s position in the market. This is where a company’s strengths and weaknesses, as well as opportunities and threats are incorporated. The usefulness of an effective strategy does not stop with providing direction for management and employees. In addition to its function as a North Star, also plays an important role in the decision-making process. For organizations that have an adequate 62 CU IDOL SELF LEARNING MATERIAL (SLM)

understanding of their strengths and weaknesses, the strategy helps managers decide where best to spend efforts and resources. Today’s modern business and markets act on a planning from dynamic strategies. Companies and organizations need to have to survive, save their market position and expand with new products and customers. Various tools exist to support this process. For example, the CAGE Distance Framework is used to identify important differences between countries that companies should take into account when developing the strategy. The McKinsey Three Horizons of Growth model helps companies avoid a gap between what a company wants to achieve in the future and where it is now in relation to its strategy. Figure 3.2: Strategy A strategy charts the course of a business. There are many theories and methods that orient themselves towards the best one. It’s always about the best fit and the commitment that’s required to make it successful. An example of this is the 5 Ps of Strategy by Henry Mint berg. Kenichi Ohmae’s 3C model focuses on the three key factors for success that must be balanced in the form of a strategic triangle. A strategy is usually translated into a strategic plan. The strategic plan consists of five elements, namely vision-mission, objectives, core values, KPIs (Key Performance Indicators) and policy & responsibility. The vision and mission align an organization. In this way, people in the organization can join forces to increase efficiency. A company’s core values reflect what it is good at and what it is proud of. A plan is furthermore nothing without well-defined objectives, the fourth part of a strategic plan. Suitable KPIs are selected to monitor progress towards the objectives. There have been lots of scientific and practical studies on this topic by Michael Porter, C. K. Prahalad, Gary Hamel and many more, from learning and developing point of view. Michael 63 CU IDOL SELF LEARNING MATERIAL (SLM)

Porter in particular has become known for his vision of strategy. According to him, a strategy is aimed at cost leadership, differentiation and focus. These strategies are known as Porter’s three generic strategies. Porter’s strategies basically describe the trade-off of strategies between cost minimization, product differentiation strategies and market focus. 3.6 GOALS A goal is an idea of the future or desired result that a person or a group of people envision, plan and commit to achieve. People endeavour to reach goals within a finite time by setting deadlines. A goal is roughly similar to a purpose or aim, the anticipated result which guides reaction, or an end, which is an object, either a physical object or an abstract object, that has intrinsic value. Goal-setting theory was formulated based on empirical research and has been called one of the most important theories in organizational psychology. Edwin and Gary P. Latham, the fathers of goal-setting theory, provided a comprehensive review of the core findings of the theory in 2002.In summary, Locke and Latham found that specific, difficult goals lead to higher performance than either easy goals or instructions to \"do your best\", as long as feedback about progress is provided, the person is committed to the goal, and the person has the ability and knowledge to perform the task A positive relationship between goals and performance depends on several factors. First, the goal must be considered important and the individual must be committed. Participative goal setting can help increase performance, but participation itself does not directly improve performance. Self also enhances goal commitment. For goals to be effective, people need feedback that details their progress in relation to their goal. This feedback needs to be positive, immediate, graphic, and specific. Providing feedback leads to set references points and \"comparisons to the standard inform their behavioural responses\" Some coaches recommend establishing specific, measurable, achievable, relevant, and time- bounded objectives, but not all researchers agree that these SMART criteria are necessary. The SMART framework does not include goal difficulty as a criterion; in the goal-setting theory of Locke and Latham, it is recommended to choose goals within the 90th percentile of difficulty, based on the average prior performance of those that have performed the task. Goals can be long-term, intermediate, or short-term. The primary difference is the time required to achieve them.Short-term goals expect to be finished in a relatively short period of time, long-term goals in a long period of time, and intermediate in a medium period of time. Some people may have trouble sticking to goals because they don’t distinguish their goals from more casual, everyday self-improvement efforts. Just because you decide to start running every day doesn’t necessarily make that a conscious goal. So let’s revisit what goal setting means. Goal setting is a purposeful and explicit process that starts with identifying a 64 CU IDOL SELF LEARNING MATERIAL (SLM)

new objective, skill, or project you want to achieve. Then, you make a plan for achieving it, and you work to complete it. Instead of just running with no particular purpose, a true goal would be more along the lines of starting a training program to complete a specific race, say a Thanksgiving Day half marathon, which requires much more careful planning, motivation, and discipline. When you set goals, you take control of your life’s or your work’s direction. Goals provide you with focus. The decisions you make and actions you take should bring you closer to achieving those goals. Setting goals keeps you moving, increases your happiness, and significantly benefits your organization. When you set goals, you create a vision of what your life or your business could look like. Then you start pushing yourself and your team to get the best results possible. 3.7 OBJECTIVES Objectives refer to the ultimate end results which are to be accomplished by the overall plan over a specified period of time. The vision, mission and business definition determine the business philosophy to be adopted in the long run. The goals and objectives are set to achieve them.  Objectives provide yardstick to measure performance of a department or SBU or organization.  Objectives serve as a motivating force. All people work to achieve the objectives.  Objectives help the organization to pursue its vision and mission. Long term perspective is translated in short-term goals.  Objectives define the relationship of organization with internal and external environment. Objectives provide a basis for decision-making. All decisions taken at all levels of management are oriented towards accomplishment of objectives.  Planning or designing a strategy involves a great deal of risk and resource assessment, ways to counter the risks, and effective utilization of resources all while trying to achieve a significant purpose.  An organization is generally established with a goal in mind, and this goal defines the purpose for its existence. All of the work carried out by the organization revolves around this particular goal, and it has to align its internal resources and external environment in a way that the goal is achieved in rational expected time.  Undoubtedly, since an organization is a big entity with probably a huge underlying investment, strategizing becomes a necessary factor for successful working internally, as well as to get feasible returns on the expended money. Strategic Management on a 65 CU IDOL SELF LEARNING MATERIAL (SLM)

corporate level normally incorporates preparation for future opportunities, risks and market trends.  This makes way for the firms to analyse, examine and execute administration in a manner that is most likely to achieve the set aims. As such, strategizing or planning must be covered as the deciding administration factor. Strategic Management and the role it plays in the accomplishments of firms has been a subject of thorough research and study for an extensive period of time now.  Strategic Management in an organization ensures that goals are set, primary issues are outlined, time and resources are pivoted, functioning is consolidated, internal environment is set towards achieving the objectives, consequences and results are concurred upon, and the organization remains flexible towards any external changes. As more and more organizations have started to realize that strategic planning is the fundamental aspect in successfully assisting them through any sudden contingencies, either internally or externally, they have started to absorb strategy management starting from the most basic administration levels.  In actuality, strategy management is the essence of an absolute administration plan. For large organizations, with a complex organizational structure and extreme regimentation, strategizing is embedded at every tier. Apart from faster and effective decision making, pursuing opportunities and directing work, strategic management assists with cutting back costs, employee motivation and gratification, counteracting threats or better, converting these threats into opportunities, predicting probable market trends, and improving overall performance.  Keeping in mind the long-term benefits to organizations, strategic planning drives them to focus on the internal environment, through encouraging and setting challenges for employees, helping them achieve personal as well as organizational objectives. At the same time, it is also ensured that external challenges are taken care of, adverse situations are tackled and threats are analysed to turn them into probable opportunities. What Objectives are Set According to Peter Druker, objectives are set in the area of market standing, innovation productivity, physical and financial resources, profitability, manager performance and development, worker performance and attitude and public responsibility. Researchers have identified the following areas for setting objectives:  Profit Objective, It is the most important objective for any business enterprise. In order to earn a profit, an enterprise has to set multiple objectives in key result areas such as market share, new product development, quality of service etc. ACKoff calls them performance objectives. 66 CU IDOL SELF LEARNING MATERIAL (SLM)

 Marketing Objective may be expressed as: to increase market share to 20 percent within five years. or to increase total sales by 10 percent annually. They are related to a functional area.  Productivity Objective may be expressed in terms of ratio of input to output. This objective may also be stated in terms of cost per unit of production.  Product Objective may be expressed in terms of product development, product diversification, branding etc.  Social Objective may be described in terms of social orientation. It may be tree plantation or provision of drinking water or development of parks or setting up of community centres.  Financial Objective relate to cash flow, debt equity ratio, working capital, new issues, stock exchange operations, collection periods, debt instruments etc. For example a company may state to decrease the collection period to 30 days by the end of this year.  Human resources objective may be described in terms of absenteeism, turnover, number of grievances, strikes and lockouts etc. An example may be to reduce absenteeism to less than 10 percent by the end of six months. 3.8 SUMMARY  Strategic Management is a relatively new discipline focused in the field of management, and provides overall direction to an organization for attaining its objectives and achieving success. It is an ongoing process in which an organization continuously updates its strategies with respect to changes taking place in the ever changing business environment. The top management of an organization concerned with selection of a course of action from among different alternatives to meet the organizational objectives.  The process by which objectives are formulated and achieved is known as strategicmanagement and strategy acts as the means to achieve the objective. Strategy is the grand design or an overall 'plan' which an organization chooses in order to move or react towards the set objectives by using its resources. Strategies most often devote a general programme of action and an implied deployment of emphasis and resources to attain comprehensive objectives.  An organization is considered efficient and operationally effective if it is characterized by coordination between objectives and strategies. There has to be integration of the parts into a complete structure. Strategy helps the organization to meet its uncertain situations with due diligence. Without a strategy, the organization is like a ship without rudder. It is like a tramp, which has no particular destination to go 67 CU IDOL SELF LEARNING MATERIAL (SLM)

to. Without an appropriate strategy effectively implemented, the future is always dark and hence, more are the chances of business failure.  The word ‗strategy ‘has entered in the field of management from the military services where it refers to apply the forces against an enemy to win a war. Originally, the word strategy has been derived from Greek 'strategies' which means General ship. The word was used for the first time in around 400 BC.  The word strategy means the art of the general to fight in war. This connotes the art and science of directing military forces. The strategy, according to a survey conducted in 1974 which asked corporate planners to define what they meant by strategy, includes the determination and evaluation of alternative paths to an already established mission or objective and eventually, choice of the alternative to be adopted. ‘‘Simply put, a strategy outlines how management plans to achieve its objectives. Strategy is the product of the strategic management process.  Generally, when we talk of organisational strategy, it refers to organisation‘s top level strategy. However, strategies exist at other levels also. Chandler made a comprehensive analysis of interrelationships among environment, strategy, and organisational structure. He analysed the history of organisational change in 70 manufacturing firms in the US. While doing so, Chandler defined strategy as: The determination of the basic long-term goals and objectives of an enterprise and the adoption of the courses of action and the allocation of resources necessary for carrying out these goals‖.  Chandler refers to three aspects: l Determination of basic long-term goals and objectives adoption of courses of action to achieve these objectives, and l allocation of resources necessary for adopting the courses of action. The dictionary meaning of strategy is, \"the art of so moving or disposing the instrument of warfare as to impose upon enemy, the place time and conditions for fighting by one self.\" Strategic Management is all about identification and description of the strategies that managers can carry so as to achieve better performance and a competitive advantage for their organization. An organization is said to have competitive advantage if its profitability is higher than the average profitability for all companies in its industry.  The concept of strategy in business has been borrowed from military science and sports where it implies out- manoeuvring the opponent. The term strategy began to be used in business with increase in competition and complexity of business operations. A strategy is an administrative course of action designed to achieve success in the face of difficulties. It is a plan for meeting challenges posed by the activities of competitors and environmental forces. Strategy is the complex plan for bringing the organization from a given state to a desired position in a future period of time. For example, if management anticipates price-cut by competitors, it may decide upon a 68 CU IDOL SELF LEARNING MATERIAL (SLM)

strategy of launching an advertising campaign to educate the customers and to convince them of the superiority of its products. 3.9 KEYWORDS  Goal – An observable and measurable end result having one or more objectives to be achieved within a more or less fixed time-frame  Goal Diagram – Generically used to describe the one-page visualization that shows the different goals of the organization and how they are related. Examples of goal diagrams include strategy plans, strategy maps and process diagrams.  Human Capital – A metaphor for the transition in organizational value creation from physical assets to the capabilities of employees. Knowledge, skills, and relationships, for example. Closely related to terms such as intellectual capital and intangible assets. Some experts suggest that as much as 75% of an organization’s value is attributable to human capital.  Initiatives – Initiatives organize people and resources and dictate which activities are required to accomplish a specific goal by a particular date; initiatives provide the how while goals provide the what. As differentiated from projects, initiatives directly support an organization’s strategic goals; projects may or may not have strategic impact.  Inputs – Commonly used within the Logic Model to describe the resources an organization invests in a program, such as time, people , money, materials, equipment, partnerships, research base, and technology, among other things. 3.10 LEARNING ACTIVITY 1. Create a session on Vision. ___________________________________________________________________________ ___________________________________________________________________________ 2. Create a survey on Mission. ___________________________________________________________________________ ___________________________________________________________________________ 3.11UNIT END QUESTIONS A. Descriptive Questions Short Questions 69 CU IDOL SELF LEARNING MATERIAL (SLM)

1. What do you mean by Vision? 70 2. What do you mean by Mission? 3. How to determine Vision statement? 4. Write the meaning of Intent? 5. Define the term business? Long Questions 1. Illustrate the Construction of a mission statement. 2. Explain the Some key benefits of having a vision and mission statement. 3. What are the Objectives ofSet. 4. Explain the Need for Establishing Objectives. 5. Illustrate the Advantages of Having a Vision. B. Multiple Choice Questions 1. What does Red symbolize in BCG matrix? a. Invest & Expand b. Harvest and Earn c. Harvest & Divest d. Select & Earn 2. What does the GE 9 cell model is based on? a. Industry attractiveness & Business Strength b. Industry Growth rate & Business strength c. Industry Attractiveness & Relative market share d. Industry Growth & Relative market share 3. What is the label of the horizontal axis in GE 9 cell matrix,? a. Relative Market share b. Industry Attractiveness c. Industry Growth Rate d. Market Growth Rate 4. Which of these seeks to relate the goals of organization to the means of achievingthem ? a. Strategy b. Levels CU IDOL SELF LEARNING MATERIAL (SLM)

c. Monitoring d. Management 5. When market & competitive conditions take an unexpected turn then required strategy is: a. Proactive b. Reactive c. Both a and b d. None of these Answers 1-c, 2-a, 3-b, 4-a, 5-b 3.12 REFERENCES References book  Chamberlin, E. 1929. Duopoly: Value where sellers are few. Quarterly Journal of Economics.  Chamberlin, E. 1933. The theory of monopolistic competition. Cambridge, MA: Harvard University Press.  Chandler, Alfred D. 1962. Scale and scope: The dynamics of industrial capitalism. Cambridge, MA: MIT Press Textbook references  Christensen, Kurt, and Cynthia Montgomery. 1981. Corporate economic performance: Diversification strategy versus market structure. Strategic Management Journal.  Coase, Ronald. 1937. The nature of the firm. Economica.  Coase, Ronald. 1998. The new institutional economics. American Economic Review. Website  https://www.researchgate.net/publication/328733737_Mission_and_Vision/link/5c2e7 2fc299bf12be3ab2f0b/download  https://en.wikipedia.org/wiki/Mission_statement  https://www.researchgate.net/publication/299483672_Nature_Scope_and_Purpose_of _Business/link/56fabbdb08aef6d10d904de3/download 71 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 4: STRATEGY FORMULATION & PROCESS STRUCTURE 4.0 Learning Objectives 4.1 Introduction 4.2 Environment Appraisal 4.3 Scanning External & Internal Environment Including PEST 4.4 BreakevenPoint their Analysis for Various Types of Decision‐making 4.5 Summary 4.6 Keywords 4.7 Learning Activity 4.8 Unit End Questions 4.9 References 4.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Appreciate the concept of Environment Appraisal  Illustrate the Scanning External & Internal Environment including PEST  Explain the BreakevenPoint their analysis for various types of decision‐making 4.1 INTRODUCTION Corporate strategy- Corporate strategy deals with the overall firm. This kind of strategy is concerned with market definition: what businesses and markets do we want to be in? A strategic initiative might be launched to answer that question, or more likely to realize the strategic intent of a new chosen business or market. These strategic decisions cannot be made at a lower level without risking sub-optimization of resources. The first task is to conduct an environmental scan (study the business environment) in order to identify strengths and weaknesses. Next would be to scrutinize the firm's mission, the segmentation of its businesses and the integration of those businesses. Completion of these tasks yields answers to the questions corporate strategy must answer: What are the corporate performance objectives? How should the firm's resources be allocated to satisfy corporate, business and functional requirements? Should the design of the managerial infrastructure and the selection, promotion and motivation of key personnel change? The Red-Ocean-Blue-Ocean metaphor has been popular over the last few years. A red ocean is a market where competitors bloody 72 CU IDOL SELF LEARNING MATERIAL (SLM)

each other up fighting for market share. A blue ocean is an emerging, growing business arena; potential competitors have not yet identified it and the opportunity for success is large. An example of corporate-level strategy: The February 2011 announcement an alliance between Microsoft and Nokia Corp. The alliance involve Nokia will produce phones running Windows Phone 7, a recognition that Nokia’s investment in its own operating system has failed. The alliance gives Microsoft access to the world’s largest phone maker and its huge mindshare - in many developing nations a mobile phone is known as a Nokia. The deal with Microsoft gives both Nokia and Microsoft a route to the future in the smart-phone market. There are four key aspects of corporate strategy. The first has to do with the strategic management of the current set of businesses in the company’s portfolio and the allocation of resources among them. The second related aspect is the creation of shareholder value through corporate strategy. The third aspect has to do with the realization of synergies across businesses and the identification and management of direct linkages between businesses. The fourth aspect is the strategy of diversification, whether through acquisition or internal development. Business strategy - This kind of strategy is concerned with succeeding in chosen markets, focuses on competitive positioning (where to compete and how) in order to create an advantage over competitors. An example of a business-level strategy was Domino’s Pizza Turnaround which required all areas of the organisation to pull together to achieve a simple understandable business goal: have a clear win against competitor in a taste test. Business managers should run the business in a way that is in alignment with overall corporate strategy. The framework for building a business strategy includes developing the mission of the business, once again conducting an environmental scan and examining the key activities of the value chain. The action plan that results directs the business strategy, programs and budget. Functional strategy- This kind of strategy is concerned with making improvements to business functions that support business and corporate strategy. Functional strategy include IT strategy, marketing strategy, IT strategy, human resources strategy, and operations. Typically, documents portraying functional strategy will list estimates and plans for operating expenses, headcount, and continuous improvement. It carries out the objectives and mission set at the corporate and business strategy levels. This is achieved by creating action plans and setting budgets. Functional-level strategy is the foundation that supports both corporate-level strategy and business strategy. Many strategic initiatives are simply the implementation of functional strategies, but often a strategic initiative straddles numerous functions and businesses. An example of functional-level strategy: In 2008, Swiss Life Group, a Zurich-based insurance company announced a change in its Information Technology functional strategy priorities. The implications of this was a decision to considerably scale back the number of IT projects in order to reduce costs through re- prioritization. This was successful as shown in this November 2010 announcement;lastly, in regards to the strategic planning process, it is not a top-down or bottom-up flow of ideas. It is a flow of objectives from managers at the corporate level combined with a flow of program and budget alternatives from the business and functional levels. If sincerely executed, the 73 CU IDOL SELF LEARNING MATERIAL (SLM)

strategic planning process generates broad participation, a wealth of ideas, consensus and clarity moving forward. Everyone knows what to do, when to do it and why he or she is doing it. Regardless of the size of your organisation, are you considering the three types of strategy? Strategic management is the process in which an organisation develops and implements plans that espouse the goals and objectives of that organisation. Strategic management process is continuous and evolves as the organisational goals and objectives change. Organisations engage in strategic management to ensure that they adapt to trends and external changes such as globalization. Several key concepts characterize strategic management and the development of organisational goals Strategic Management can be defined as an ongoing the process Dess, Lumpkin and Taylor, Indicates that strategic management of an organisation entails three ongoing processes: analysis, decisions, and actions. That is, strategic management is concerned with the analysis of strategic goals along with the analysis of the internal and external environment of the organisation. In essence strategic management consists of the analysis, decisions, and actions an organisation undertakes in order to create and sustain competitive advantages. In essence strategic management is centred around businesses world and respond to the questions of “where do you want your business to go” “how is your business going to get there” and “how will you know when you get there “A strategic management is like taking a journey during your holiday, you first decide where you want to go Cape Town in Robbin Island. Then you develop a strategy of how to get there take an airplane, drive your car etc. This will be influenced by the amount of money, time and other resources you have available. Then you monitor your trip to see if your strategy takes you to your destination and how your strategy worked, Therefore strategic management is the widespread set of ongoing activities and processes that organisations use to systematically coordinate and align resources and actions with mission, vision and strategy throughout an organisation. Strategic management activities transform the plan into a system that provides strategic performance feedback to decision making and enables the plan to evolve and grow as requirements and other circumstances change. In a nutshell the strategic management can be summarized and defined as the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organisation to achieve its objectivesMost importantly to be noted that strategic management is not about predicting the future, but about preparing for it and knowing what exact steps the organisation will have to take to implement its strategic plan and achieve a competitive advantage. Strategic management is a continuous process that evaluates and controls the business and the industries in which an organization is involved; evaluates its competitors and sets goals and strategies to meet all existing and potential competitors; and then re-evaluates strategies on a regular basis to determine how it has been implemented and whether it was successful or does it needs replacement.Strategic Management gives a broader perspective to the employees of an organization and they can better understand how their job fits into the entire 74 CU IDOL SELF LEARNING MATERIAL (SLM)

organizational plan and how it is co-related to other organizational members. It is nothing but the art of managing employees in a manner which maximizes the ability of achieving business objectives. The employees become more trustworthy, more committed and more satisfied as they can co-relate themselves very well with each organizational task. They can understand the reaction of environmental changes on the organization and the probable response of the organization with the help of strategic management. Thus the employees can judge the impact of such changes on their own job and can effectively face the changes. The managers and employees must do appropriate things in appropriate manner. They need to be both effective as well as efficient. One of the major role of strategic management is to incorporate various functional areas of the organization completely, as well as, to ensure these functional areas harmonize and get together well. Another role of strategic management is to keep a continuous eye on the goals and objectives of the organization. The strategic management process means defining the organization‘s strategy. It is also defined as the process by which managers make a choice of a set of strategies for the organization that will enable it to achieve better performance. Strategic management is a continuous process that appraises the business and industries in which the organization is involved; appraises its competitors; and fixes goals to meet the entire present and future competitor‘s and then reassesses each strategy. 4.2 ENVIRONMENT APPRAISAL Organizational environment consists of both external and internal factors. Environment must be scanned so as to determine development and forecasts of factors that will influence organizational success. Environmental scanning refers to possession and utilization of information about occasions, patterns, trends, and relationships within an organization’s internal and external environment. It helps the managers to decide the future path of the organization. Scanning must identify the threats and opportunities existing in the environment. While strategy formulation, an organization must take advantage of the opportunities and minimize the threats. A threat for one organization may be an opportunity for another. Internal analysis of the environment is the first step of environment scanning. Organizations should observe the internal organizational environment. This includes employee interaction with other employees, employee interaction with management, manager interaction with other managers, and management interaction with shareholders, access to natural resources, brand awareness, organizational structure, main staff, operational potential, etc. Also, discussions, interviews, and surveys can be used to assess the internal environment. Analysis of internal environment helps in identifying strengths and weaknesses of an organization. As business becomes more competitive, and there are rapid changes in the external environment, information from external environment adds crucial elements to the effectiveness of long-term plans. As environment is dynamic, it becomes essential to identify competitors ‘moves and actions. Organizations have also to update the core competencies and internal environment as per external environment. Environmental factors are infinite; hence, 75 CU IDOL SELF LEARNING MATERIAL (SLM)

organization should be agile and vigil to accept and adjust to the environmental changes. For instance - Monitoring might indicate that an original forecast of the prices of the raw materials that are involved in the product are no more credible, which could imply the requirement for more focused scanning, forecasting and analysis to create a more trustworthy prediction about the input costs. In a similar manner, there can be changes in factors such as competitor‘s activities, technology, market tastes and preferences. Examining the industry environment needs an appraisal of the competitive structure of the organization‘s industry, including the competitive position of a particular organization and its main rivals. Also, an assessment of the nature, stage, dynamics and history of the industry is essential. It also implies evaluating the effect of globalization on competition within the industry. Analysing the national environment needs an appraisal of whether the national framework helps in achieving competitive advantage in the globalized environment. Analysisof macro- environment includes exploring macro-economic, social, government, legal, technological and international factors that may influence the environment. The analysis of organization‘s external environment reveals opportunities and threats for an organization. Strategic managers must not only recognize the present state of the environment and their industry but also be able to predict its future positions. Environmental scanning is the process of gathering information about events and their relationships within an organization's internal and external environments. The basic purpose of environmental scanning is to help management determine the future direction of the organization. Thomas Edison State University uses a continuous scanning system in which committee members meet monthly to discuss internal and external events which have the potential to effect the way the University does business. These events can include student enrolment trends, in climate weather or natural disasters, world events, funding, federal legislation, marketing, etc. Monthly findings are then aggregated quarterly and dispersed to all College staff. The Environmental Scanning Committee is a valuable resource to management, allowing them to make decisions influenced from trended analysis of historical events to project future events. The committee also assists in creating action plans to address these upcoming events, reviewing action plans and appropriating resources for those plans, and putting management in contact with fellow staff members with the knowledge base to provide quality data for decision making. In any business organization, there is an internal and external environment. They comprise all the factors that can affect the business of a company in any way. And they also present opportunities for the business to grow and threats that may harm the business. So these environments need constant monitoring. This is where environmental scanning comes into the picture. 76 CU IDOL SELF LEARNING MATERIAL (SLM)

Environmental scanning meaning is the gathering of information from organizations internal and external environments, and careful monitoring of these environments to identify future threats and opportunities. It is the analyses of all factors that may affect the future of the organization. Now that we know the environmental scanning meaning, let us see the purpose. The purpose of this process of environmental scanning is to provide the entrepreneur with a roadmap to the changes likely to happen in the future. So this way they can adapt the business to overcome the threats and capitalize on the opportunities coming their way. 4.3 SCANNING EXTERNAL & INTERNAL ENVIRONMENT INCLUDING PEST Organizational environment consists of both external and internal factors. Environment must be scanned so as to determine development and forecasts of factors that will influence organizational success. Environmental scanning refers to possession and utilization of information about occasions, patterns, trends, and relationships within an organization’s internal and external environment. It helps the managers to decide the future path of the organization. Scanning must identify the threats and opportunities existing in the environment. While strategy formulation, an organization must take advantage of the opportunities and minimize the threats. A threat for one organization may be an opportunity for another. Internal analysis of the environment is the first step of environment scanning. Organizations should observe the internal organizational environment. This includes employee interaction with other employees, employee interaction with management, manager interaction with other managers, and management interaction with shareholders, access to natural resources, brand awareness, organizational structure, main staff, operational potential, etc. Also, discussions, interviews, and surveys can be used to assess the internal environment. Analysis of internal environment helps in identifying strengths and weaknesses of an organization. As business becomes more competitive, and there are rapid changes in the external environment, information from external environment adds crucial elements to the effectiveness of long-term plans. As environment is dynamic, it becomes essential to identify competitors’ moves and actions. Organizations have also to update the core competencies and internal environment as per external environment. Environmental factors are infinite; hence, organization should be agile and vigil to accept and adjust to the environmental changes. For instance. Monitoring might indicate that an original forecast of the prices of the raw materials that are involved in the product are no more credible, which could imply the requirement for more focused scanning, forecasting and analysis to create a more trustworthy prediction about the input costs. In a similar manner, there can be changes in factors such as competitor’s activities, technology, market tastes and preferences. 77 CU IDOL SELF LEARNING MATERIAL (SLM)

Let’s start with internal analysis. As the name suggests, internal analysis focuses on evaluating all aspects of the organization itself. Although internal analysis can sometimes take into account the actions of external organizations or market-wide shifts, it is largely related to the inherent traits of the organization at hand. For example, internal analysis can allow you to identify both strong and weak aspects of your organization, without taking into account the performance of external organizations. Here’s another way to think about internal analysis: if your organization was the only one that existed meaning your organization had no competition and your business environment was entirely neutral meaning it didn’t in any way affect your organization then what factors would you consider when analysing your organization? In the context of strategic management, internal analysis is crucial for a few reasons. Your organization might be spending too much in some areas due to internal inefficiencies, or, alternatively, your organization could be leaving money on the table. The only way to reveal these things and get a true understanding of how resources are being used in your organization is by means of internal analysis. Let’s switch gears and talk about external, or environmental, analysis. Unlike internal analysis, external analysis is less about the organization itself, and more about its business environment (including its competitors). Again: the term is mostly self-explanatory looking at external business analysis factors instead of internal ones. So, what exactly would an example of an external factor be? The number of new competitors entering your industry, the cost of materials used to manufacture your products, or the regulatory frameworks set out by governments these are all examples of variables which are out of your organization’s control, and should be taken into account in external analysis. As you might expect, external analysis is also very important in the context of strategic management. When evaluating your organization’s goals and resources, you absolutely need to look at the surrounding business environment. In a perfect world, it would be enough just to look inside your organization; in the real world, you need to be conscious of external forces that might affect your business’ operations and throw you off course. For analysing external factors, the PESTLE model should be your tool of choice. PESTLE stands for Political, Economic, Sociocultural, Technological, Legal, and Environmental, which are the six categories of environmental factors you should take into account during business analysis (like in strategic management). If you look closely, you’ll see that these almost all of the factors that fall into these six categories aren’t inherently related to your organization, but are related to the overarching business environment: Similarly to SWOT analysis, using PESTLE analysis is surprisingly easy. Simply categorize the external factors affecting your business as Political, Economic, Sociocultural, Technological, Legal, or Environmental. The challenge is finding those factors in the first place. It’s helpful if you have some experience in your industry, which would give 78 CU IDOL SELF LEARNING MATERIAL (SLM)

you a headstart on where to look. Otherwise, you’ll need to do a lot of brainstorming and trawl through plenty of reports to find out which factors really affect your organization. 4.4 BREAKEVENPOINT THEIR ANALYSIS FOR VARIOUS TYPES OF DECISION‐MAKING The principle idea behind break-even analysis is that all costs are variable or a combination of both. Theoretically, after fixed costs are covered, each dollar of sales will have to cover only variable costs. The break-even point at which a firm makes no profit or sustains no loss can be computed or it can be determined from a graphic presentation of the relationship between revenue, cost and volume of productive capacity. In either case, the information required is: Total estimated fixed costs and expenses for a future period, such as a year, and The total estimated variable costs and expenses for the same period, stated as a percent of net sales. Break-even Point (in $) = Fixed Costs (in $) + Variable Costs (as % of Break-even Sales) Because most firms desire to make a profit and not just break even, a profit should be added to the variable costs. This reduces the gross profit, which in turn raises the breakeven volume. The resulting break-even volume thus becomes the target volume necessary to achieve the firm's profit objective. If the firm is able to sell the higher volume, profit will be made if costs remain linear. Break-even is the point at which total income from sales equals total expenses. Break-even analysis helps you determine the amount of sales needed to break even. Break-even is used to answer questions such as: what is the minimum level of sales needed to ensure there is not a financial loss and how sensitive is break-even sales volume to changes in costs or price? There are several elements that you need to understand in order to determine your break-even point. These include fixed costs, variable costs, sales revenues, and contribution margin and profit goals. Let’s get started looking at these. Categorizing your operating costs between fixed and variable costs are essential for break-even analysis. Fixed costs are those which are not directly related to the volume of production. They are often referred to as “overhead” costs and do not change as sales volume or production changes. You still have these costs even if production or sales stop. Fixed costs generally include administrative costs and salaried personnel costs, rents, interest, depreciation, insurance and property taxes. Variable costs, on the other hand, are those that change when your production output or sales volume changes. Variable costs generally include wages for labour, raw materials, sellers’ commissions, packaging, freight and energy costs. Classifying your costs is very important to conducting a good break-even analysis, so it is important that you as the manager have a good handle on all of your costs and whether they do or do not change with output or sales. If you have this understanding, then you can properly classify each cost. Revenues are the sales dollars you receive for selling your product or service. You will need to forecast your expected sales by multiplying the number of units of product service that you expect to sell by the price you will charge your customers. 79 CU IDOL SELF LEARNING MATERIAL (SLM)

Contribution margin is another important element to understand in break-even analysis. Once you know your variable costs and have a forecast for your expected sales, the contribution margin is easy to determine. Contribution margin is just revenues minus variable costs. Why is this important? This margin is used to contribute or help cover fixed costs. Once you cover all your fixed costs, then this contribution margin goes directly to the “bottom line” as profit. Break-even sales can be determined using the following formula: Break-even sales ($) = fixed costs/(contribution margin/total sales) Once you have determined your break-even sales in dollars, you can convert this to number of units sold in order to break-even — simply divide break-even sales dollars by the per unit selling price. If units are sold at differentiated prices, then divide by the average selling price per unit. Suppose your business portfolio involves selling feed by the truckload. Assume you have determined that your fixed costs for this portion of your business are $1,500,000 and your variable costs are $21,000,000. You expect sales revenues of $23,400,000 for the year. So, the break-even calculation would be: Break-even sales = $1,500,000/2,400,000 /$23,400,000) = $14,625,000. Under these assumptions, the business must sell $14,625,000 of feed by the truckload to cover all costs, and then the remainder of sales generate a profit. If your business sells feed by the 25 ton truck at an average price of $180/ton, then you need to sell 3,250 truckloads of feed to meet break-even sales. Since you expect sales of $23,400,000 and break-even sales are $14,625,000, then sales above break-even are $8,775,000. If you look at the contribution margin as a percentage of sales, we see that roughly just over $0.1025 of every dollar of sales goes to cover fixed costs. After you have determined a break-even point, you can now evaluate a number of different scenarios using the calculation. This is often referred to as a sensitivity analysis and allows you to ask and evaluate a number of “what if” questions. For example, what if you increase your sales price by 25%, or what if your unit sales decline by 25% (these are just a couple examples). These “what if” questions can be quickly answered if you set up a simple break- even calculator in a spreadsheet; this will perform your calculations very quickly and will allow you to look at a number of different situationsseveral different scenarios. Notice that increasing the sales price and reducing variable costs have the greatest impact on increasing profit, assuming that nothing else changes in either situation. 4.5 SUMMARY  Strategic Management gives a broader perspective to the employees of an organization and they can better understand how their job fits into the entire organizational plan and how it is co-related to other organizational members. It is nothing but the art of managing employees in a manner which maximizes the ability of achieving business objectives. One of the major role of strategic management is to 80 CU IDOL SELF LEARNING MATERIAL (SLM)

incorporate various functional areas of the organization completely, as well as, to ensure these functional areas harmonize and get together well.  Another role of strategic management is to keep a continuous eye on the goals and objectives of the organization. Environmental scanning refers to possession and utilization of information about occasions, patterns, trends, and relationships within an organization‘s internal and external environment. It helps the managers to decide the future path of the organization. Scanning must identify the threats and opportunities existing in the environment. Internal analysis of the environment are the first step of environment scanning.  Strategy formulation is the process of deciding best course of action for accomplishing organizational objectives and hence achieving organizational purpose. Strategy implementation implies making the strategy work as intended or putting the organization‘s chosen strategy into action. Strategic Evaluation is significant because of various factors such as - developing inputs for new strategic planning, the urge for feedback, appraisal and reward, development of the strategic management process, judging the validity of strategic choice etc.  While measuring the actual performance and comparing it with standard performance there may be variances which must be analysed. The strategists must mention the degree of tolerance limits between which the variance between actual and standard performance may be accepted. The positive deviation indicates a better performance but it is quite unusual exceeding the target always. The negative deviation is an issue of concern because it indicates a shortfall in performance. Thus in this case the strategists must discover the causes of deviation and must take corrective action to overcome it.  Once the deviation in performance is identified, it is essential to plan for a corrective action. If the performance is consistently less than the desired performance, the strategists must carry a detailed analysis of the factors responsible for such performance. If the strategists discover that the organizational potential does not match with the performance requirements, then the standards must be lowered.  Another rare and drastic corrective action is reformulating the strategy which requires going back to the process of strategic management, reframing of plans according to new resource allocation trend and consequent means going to the beginning point of strategic management process.  While fixing the benchmark, strategists encounter questions such as - what benchmarks to set, how to set them and how to express them. In order to determine the benchmark performance to be set, it is essential to discover the special requirements for performing the main task. 81 CU IDOL SELF LEARNING MATERIAL (SLM)

 The performance indicator that best identify and express the special requirements might then be determined to be used for evaluation. The organization can use both quantitative and qualitative criteria for comprehensive assessment of performance. Quantitative criteria include determination of net profit, ROI, earning per share, cost of production, rate of employee turnover etc. Among the Qualitative factors are subjective evaluation of factors such as - skills and competencies, risk taking potential, flexibility etc. 4.6 KEYWORDS  Strategic management process: Strategic management process is a mechanism that evaluates and controls the business in which an organization is involved.  Environmental Scanning: It refers to a process of collecting, scrutinizing and providing information for strategic purposes.  Strategyformulation: Strategy formulation is the process of deciding best course of action for accomplishing organizational objectives and hence achieving organizational purpose.  Strategy implementation: It refers toputting the organization‘s chosen strategy into action.  Strategy evaluation: It ensures that the organizational strategy as well as its implementation meets the organizational objectives. 4.7 LEARNING ACTIVITY 1. Create a session on BreakevenPoint ___________________________________________________________________________ ___________________________________________________________________________ 2. Create a survey on various types of decision‐making ___________________________________________________________________________ ___________________________________________________________________________ 4.8 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What is break-even? 2. Define Revenues 82 CU IDOL SELF LEARNING MATERIAL (SLM)

3. How to Calculate break-even 4. What is Environment Appraisal 5. Define the term Scanning Long Questions 1. Explain the Scanning External & Internal Environment including PEST 2. Illustrate the Breakeven Pointtheir analysis for various types of decision‐making 3. Explain the concept of Environment Scanning 4. Illustrate the advantages of Breakeven point 5. Examine the characteristics of Environment Appraisal B. Multiple Choice Questions 1. Which of these serves as a corporate defence mechanism against mistakes &pitfalls? a. Strategic Management b. Marketing Techniques c. Strategic Awareness d. Competitive Analysis 2. Which is a planned strategy a. Proactive b. Reactive c. Adaptive d. None of these 3. Which is not an advantage of strategic management a. Helps organizations to be proactive b. Control their own destiny in better manner c. Identify available opportunity d. None of these 4. Which is a set of interrelated functions & processes carried out by management of an organization to attain its objective Secondary market a. Strategy b. Execution c. Monitoring 83 CU IDOL SELF LEARNING MATERIAL (SLM)

d. Management 5. Which is adaptive reaction to changing business environment a. Proactive b. Reactive c. Adaptive d. None of these Answers 1-a, 2-a, 3-d, 4-a, 5-a 4.9 REFERENCES References book  Cohen, W. M., and D. A. Levinthal. 1990. Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly.  Collins, Jim, and Jerry I. Porras. 1994. Built to last: Successful habits of visionary companies. New York: Harper.  Collins. Comanor, W., and T. Wilson. 1974. Advertising and market power. Cambridge, MA: Harvard University Press. Textbook references  Conner, K. R. 1991. A historical comparison of resource-based theory and five schools of thought within industrial organization economics: Do we have a new theory of the firm? Journal of Management.  Copeland, Tom, Tim Koller, and Jack Murrin. 2000. Valuation: Measuring and managing the value of companies. McKinsey & Company.  Curry, B., and K. George. 1983. Industrial concentration: A survey. Journal of Industrial Economics. Website  https://www.feedandgrain.com/magazine/using-break-even-analysis-in-business- decisions  https://www.managementstudyguide.com/environmental-scanning.htm  https://pestleanalysis.com/internal-and-external-analysis-in-strategic-management/ 84 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 5: TECHNIQUESFOR ENVIRONMENTAL SCANNING STRUCTURE 5.0 Learning Objectives 5.1 Introduction 5.2 SWOT 5.3 ETOPandQuest. 5.4 Summary 5.5 Keywords 5.6 Learning Activity 5.7 Unit End Questions 5.8 References 5.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Explainthe concept of SWOT.  Illustrate the concept of ETOP.  Illustrate the concept of Quest. 5.1 INTRODUCTION This technique, which operates by 'peeling back layers of the company’s designed for use in the preliminary stages of decision-making processes and can be used as a tool for evaluation of the strategic position of organizations of many kinds. It is intended to specify the objectives of the business venture or project and identify the internal and external factors that are favourable and unfavourable to achieving those objectives. Users of a SWOT analysis often ask and answer questions to generate meaningful information for each category to make the tool useful and identify their competitive advantage. SWOT has been described as the tried-and-true tool of strategic analysis, but has also been criticized for its limitations. SWOT assumes that strengths and weaknesses are frequently internal, while opportunities and threats are more commonly external. The name is an acronym for the four parameters the technique examines: 85 CU IDOL SELF LEARNING MATERIAL (SLM)

The degree to which the internal environment of the firm matches with the external environment is expressed by the concept of strategic fit. Identification of SWOTs is important because they can inform later steps in planning to achieve the objective. First, decision- makers should consider whether the objective is attainable, given the SWOTs. If the objective is not attainable, they must select a different objective and repeat the process. Some authors attribute SWOT analysis to Albert Humphrey, who led a convention at the Stanford Research Institute in the 1960s and 1970s using data from Fortune 500 companies. However, Humphrey himself did not claim the creation of SWOT, and the origins remain obscure. Internal factors are viewed as strengths or weaknesses depending upon their effect on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses for another objective. The factors may include personnel, finance, manufacturing capabilities, and all of the marketing mix's 4Ps. External factors include macroeconomics, technological change, legislation, and socio cultural changes, as well as changes in the marketplace. Results are often presented in the form of a matrix. SWOT analysis can be used to build organizational or personal strategy. Steps necessary to execute strategy-oriented analysis involve identification of internal and external factors (using the popular 2x2 matrix), selection and evaluation of the most important factors, and identification of relations existing between internal and external features. For instance, strong relations between strengths and opportunities can suggest good conditions in the company and allow using an aggressive strategy. On the other hand, strong interactions between weaknesses and threats could be analysed as a potential warning and advice for using a defensive strategy. SWOT analysis is a method of categorization for which lists are compiled, uncritically and without prioritization, rather than seeking important factors to achieving objectives; weak opportunities may appear to balance strong threats. 5.2 SWOT SWOT is made of two parts: the strengths and weaknesses refer to the internals of a company while the opportunities and threats are external to the company and exist in the environment. Strength of a company could be in managing the branding process quickly and comprehensively. Its weaknesses could lie in the distribution of products, or payment delays. These are internal problems / issues and have to be understood and dealt with on an ongoing basis. Often consultants are called in to assess these two aspects on the belief that an outsider could give more insights into the company. The two external factors, opportunities and threats, are not in the company's control. The environment, composed of social, economic, legal, regulatory, national and even international events, has to be continuously scanned to track these. For example, an opportunity for a refrigerator company could be in freezers for 86 CU IDOL SELF LEARNING MATERIAL (SLM)

ice cream; threats could be imports or the entry of new players with money and expertise. In a globalising world, opportunities can spring up anywhere, anytime, just as threats can come from any part or segment of global industry. SWOT stands for 'Strengths, Weaknesses, Opportunities and Threats'. This is a method of analysis of the environment and the company's standing in it. SWOT Analysis is the most renowned tool for audit and analysis of the overall strategic position of the business and its environment. Its key purpose is to identify the strategies that will create a firm specific business model that will best align an organization’s resources and capabilities to the requirements of the environment in which the firm operates. In other words, it is the foundation for evaluating the internal potential and limitations and the probable/likely opportunities and threats from the external environment. It views all positive and negative factors inside and outside the firm that affect the success. A consistent study of the environment in which the firm operates helps in forecasting/predicting the changing trends and also helps in including them in the decision-making process of the organization. Before we describe SWOT analysis of the Event Industry, we first need to understand what is SWOT and how it is conducted? Through this blog, we want to help out existing and budding event entrepreneurs on how to start/sustain an event management company. Examples include competitors, prices of raw materials, and customer shopping trends. A SWOT analysis organizes your top strengths, weaknesses, opportunities, and threats into an organized list and is usually presented in a simple two-by-two grid. How to Do SWOT Your SWOT analysis should be very effective. After all, this is the analysis that you’re going to use to bring in positive changes to your business.  It is important to set an attainable objective before you perform SWOT.  Make sure you have a well-defined template for your SWOT analysis.  Involve your employees, as they’re the ones who deal with day-to-day challenges and struggles of the business.  Include all the 4Ps of the marketing mix in your SWOT analysis. We present to you a detailed SWOT Analysis blueprint which will help you to conduct a proper SWOT analysis.  Determine the objective. Decide on a key project or strategy to analyse and place it at the top of the page.  Create a grid. Draw a large square and then divide it into four smaller squares.  Label each box. Write the word \"Strengths\" inside the top left box, \"Weaknesses\" inside the top right box, \"Opportunities\" within the bottom left box, and \"Threats\" 87 CU IDOL SELF LEARNING MATERIAL (SLM)

inside the bottom right box. These are titles, so they should be distinguished from the rest of the text using either colour or font size. Smart Draw offers several SWOT diagram templates designed to make construction quick and easy.  Add strengths and weaknesses. Add factors that affect the project to the applicable boxes. Components of a SWOT analysis may be qualitative and anecdotal as well as quantitative and empirical in nature. Factors are typically listed in a bullet form.  Draw conclusions. Analyse the finished SWOT diagram. Be sure to note if the positive outcomes outweigh the negative. If they do, it may be a good decision to carry out the objective. If they do not, adjustments may need to be made, or else the plan should simply be abandoned. SWOT Analysis Blueprint Major Factors to Consider There are majorly two factors that mark the execution of the SWOT analysis. This analysis aims at identifying major internal and external factors that are crucial for achieving the objective.  Internal Factor  External Factor Internal Factors deal with all the internal workings of your business, the strengths of your business and the weaknesses and challenges of your business. These factors include everything your business is good at. Basically the USP of your business, Factors that mark as the strengths for one’s objective may represent weakness for another objective. Whereas external factors are those that you don’t have any control upon. These factors affect your business from outside. It is wise to not discard any SWOT entry quickly. The significance of every individual SWOT is realized by the value of strategies that they produce. Strengths and Weaknesses Strength addresses everything that your business can do well or is strong at. All the attributes that can help you achieve success. It can be either tangible or intangible. Any internal factor likes,  Determination of resources  Usage of these resources for the target audiences  Ascertaining capabilities  Advantages  Ways to improve 88 CU IDOL SELF LEARNING MATERIAL (SLM)

Are a few examples of strengths? Try your best to make use of these to the fullest. Weaknesses address everything that your business cannot do well or is not strong at, All the attributes that hinder your achievement as a business. Weaknesses of your business are opposite to the strengths of your business. Any internal factor likes,  Unexplored resources  Weak business team  Lack of coordination  Poor competitor analysis  Poor funding Are a few examples of weaknesses? Try your best to minimize your weaknesses and maximize your strengths. Opportunities address everything that works in favour of your business. Any external factors like  underserved market  little competition  the emerging need for the particular service and  media coverage are a few examples of opportunities. Never miss on these opportunities. Threats are exactly opposite to the opportunities. Any kind of external factor that refrains your business from achieving the target or making it a success likes,  Economic changes  Changes in market trends  Strong competition  Natural disaster  Taxes are a few examples of threats. Always make sure to avoid or overcome these threats to make your event successful. SWOT Analysis for a Successful Event SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors and opportunities and threats are external factors. A SWOT diagram analyses a project or business venture by focusing on each of these factors. It typically 89 CU IDOL SELF LEARNING MATERIAL (SLM)

consists of four boxes, one for each area, but the exact shape may vary depending on the design. Strengths Strength includes all the attributes and features that make your event achieving and successful. Think about what is the strong feature of your event. For Example, if it is a workshop that you’re planning to conduct, then the offerings that you’re giving to your attendees should be your strength. Your strengths can also be promotions and marketing tactics. Weaknesses Weaknesses are the features and attribute that refrain your event from becoming a success. Think and know about the weak features of your event. For Example, if you’re organizing an event, an inexperienced event team or an inefficient management system can be one of your greatest weaknesses. Opportunities Opportunities are the external factors that positively contribute to your event goals. Never miss out on these. Make proper use of these opportunities to make your event a success. For example, if you’re organizing an event, the little competition, your brand reputation, and the favourable economic conditions are a few examples of opportunities. Threats Threats are the external factors that may pull you back from achieving your event goals. Be aware of these threats and make sure your event is not affected due to this. For example, if you’re organizing an event in an open arena, bad weather condition can be a threat to your event. Building Strategy SWOT is very effective in building organizational and personal strategies. It is possible to execute a Strategic-oriented analysis with the recognition of internal & external factors selection and evaluation of the important and relevant factors, the relationship between these factors. For instance, a strong relationship between the strength and opportunity defines a good condition of the organization and business, and that means you may opt for an aggressive strategy. On the other hand, a strong relationship between the weakness and threat will be concluded as a potential warning for the organization as well as the business and that suggests a defensive strategy. 90 CU IDOL SELF LEARNING MATERIAL (SLM)

It lacks critical thinking of the strategies which would lead to misinterpretation of the external and internal factors in the business surroundings. For example, focusing on a single strength like minimum cost may lead to neglecting a major weakness of product quality. SWOT is performed to defend the goals and objectives that are pre-defined. This misuse may lead to distraction from the real barriers, keeps the organization’s objective above the welfare of the community. Advantages of SWOT Analysis SWOT Analysis is instrumental in strategy formulation and selection. It is a strong tool, but it involves a great subjective element. It is best when used as a guide, and not as a prescription. Successful businesses build on their strengths, correct their weakness and protect against internal weaknesses and external threats. They also keep a watch on their overall business environment and recognize and exploit new opportunities faster than its competitors. SWOT Analysis helps in strategic planning in following manner-  It is a source of information for strategic planning.  Builds organization’s strengths.  Reverse its weaknesses.  Maximize its response to opportunities.  Overcome organization’s threats.  It helps in identifying core competencies of the firm.  It helps in setting of objectives for strategic planning.  It helps in knowing past, present and future so that by using past and current data, future plans can be chalked out. SWOT Analysis provide information that helps in synchronizing the firm’s resources and capabilities with the competitive environment in which the firm operates. Limitations of SWOT Analysis SWOT Analysis is not free from its limitations. It may cause organizations to view circumstances as very simple because of which the organizations might overlook certain key strategic contact which may occur. Moreover, categorizing aspects as strengths, weaknesses, opportunities and threats might be very subjective as there is great degree of uncertainty in market. SWOT Analysis does stress upon the significance of these four aspects, but it does not tell how an organization can identify these aspects for itself. There are certain limitations of SWOT Analysis which are not in control of management. These include-  Price increase; 91 CU IDOL SELF LEARNING MATERIAL (SLM)

 Inputs/raw materials;  Government legislation;  Economic environment;  Searching a new market for the product which is not having overseas market due to import restrictions; etc. Internal limitations may include-  Insufficient research and development facilities;  Faulty products due to poor quality control;  Poor industrial relations;  Lack of skilled and efficient labour; etc Examples:Include competitors, prices of raw materials, and customer shopping trends. A SWOT analysis organizes your top strengths, weaknesses, opportunities, and threats into an organized list and is usually presented in a simple two-by-two grid. 5.3 ETOPANDQUEST ETOP analysis is the process by which organizations monitor their relevant environment to identify opportunities and threats affecting their business for the purpose of taking strategic decisions. ETOP analysis is a management tool that analyses environmental information and determines the relative impact of threats and opportunities for the systematic evaluation of the environment. Environment scanning is the process of gathering, analysing and dispensing information for tactical or strategic purposes. ETOP process involves dividing the environment into different environmental sectors and then analysing the impact of each sector on the organization. ETOP gives a clear picture to the strategies about each aspect of the business environment, the various individual factors within each sector which affect the business favourably or otherwise. Environmental scanning is the monitoring, evaluating, and disseminating of information from the external and internal environment to key people within the corporation or organization. Business environment analysis is a regular business feature. It results in a quantity of information related to forces in the environment. It usually relates to events, trends, issues, natural calamities and expectations. ETOP analysis (environmental threat and opportunity profile) is the process of gathering information about events and their relationships within an organization’s internal and external environments. The basic purpose of environmental scanning is to help management determine the future direction of the organization. 92 CU IDOL SELF LEARNING MATERIAL (SLM)

Structuring of environmental issues is necessary to make them meaning full for strategy formulation. Understanding of management strategy or organization policy and effectiveness is not as easy; it requires looking at how company is griped with challenges, looking at the threats and opportunities and finding solutions for facing it. It requires proper evaluation on the position of an organization, whether the adopted strategy is working well and if not why and how should it progress ahead. Strategies are means of operationally signing a policy for goals and objective. For company to function very well and to be productive to its maximum standard effective strategy should not be impeded. Sometimes very micro and neglected issues mar the strategy. ETOP involves dividing the environment into different sectors. Each sectors can be subdivided into sub sectors. For example oil & gas sector can be broken down into sub- sectors such as exploration & production, integrated oil & gas, oil equipment & services, pipelines, renewable energy equipment, alternative fuels producers, oil equipment, services & distribution, alternative energy etc. ETOP further analyses the impact of each sector and sub- sector on the organization. For example, GE Oil & Gas as an existing organization in this sector requires to scan the environment from an industry perspective: O&NG industry is divided into three major sectors – upstream, midstream and downstream. The upstream sector is a term commonly used to refer to exploration, recovery and production of O&NG. In industry jargon it is simply called Exploration and Production (E&P). The downstream sector is a term commonly used to refer to the refining of crude oil and the selling and distribution of natural gas and products derived from crude oil. The midstream industry processes, stores, markets and transports commodities such as crude oil, natural gas, natural gas liquids (liquefied natural gas such as ethane, propane and butane) and Sulphur. Example:  Social (↑): Customer preference for motorbike, which are fashionable, easy to ride and durable.  Political (→): No significant factor.  Economic (↑): Growing affluence among urban consumers; Exports potential high. 93 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 5.1: ETOP An organization’s internal environment consists of the elements within the organization, including current employees, management, the organization’s culture which is defined by operating procedures and employee behaviour. Though some elements affect the organization as a whole, others affect only the management. A manager’s philosophical or leadership style directly impacts employees. Traditional managers give explicit instructions to employees, while progressive managers empower employees to make many of their own decisions. Changes in philosophy and leadership style are under the control of the manager. Unlike the external environment of a business, the internal environment can be controlled. It is important to recognize potential opportunities and threats outside company operations. However, managing the strengths of internal operations is the key to business success. Leadership matters a lot in controlling the internal environment. The external environment of an organization is those factors outside the company that affect the company’s ability to function. Some external elements can be manipulated by company marketing, while others require the organization to make adjustments. Organizations need to monitor the basic components of a firm’s external environment, and keep a close watch on it at all times. The external environment consists of customers, government, economy and competition. Managing image of an organization is most important in the external environment. Corporate image, or reputation, describes the manner in which a company, its activities, and its products or services are perceived by outsiders. In a competitive business climate, many businesses actively work to create and communicate a positive image to their customers, shareholders, 94 CU IDOL SELF LEARNING MATERIAL (SLM)

the financial community, and the general public. A company that bungles or ignores its image is likely to encounter a variety of problems. Once an organization gets into reputation problems, it goes on growing like weeds in a garden. Opportunities and Threats: External opportunities provide an organization with a means to improve its performance and competitive advantage in a market environment. Some opportunities can be foreseen, such as being able to expand a franchise into a new city. When organizations can think far ahead, they can create some opportunities External threats are anything in the outside environment that can adversely affect its performance or achievement of its goals. Ironically, stronger organizations can be exposed to a greater level of threats than weaker organizations, because success raises envy and competition which a successful organization needs to fight to get ahead. Examples of external threats include new and existing regulations, new and existing competitors, new technologies that may make products or services obsolete, unstable political and legal systems in foreign markets and economic downturns. When organizations are alert and have enough resource they can turn a threat into an opportunity, such as a new technology that may displace one of the key products but also provides an opportunity for new product development. This manual describes and illustrates ED QUEST (Quick Environmental Scanning Technique), an educational planning model designed to identify emerging issues and events which portend threats and opportunities to colleges and universities, to analyse the probable impact of these variables on the organization, and to facilitate the development of appropriate organizational strategies. After section 1 discusses key elements in strategic management, section 2 provides a description of a hypothetical public two-year college used in a simulation of the application of ED QUEST. The next sections detail the steps involved in each of the major activities: preparing for the ED QUEST process; defining the nature of the organization, including elements of the mission, indicators of institutional performance, and strengths and weaknesses; identifying universe of critical trends and future events through brainstorming or the Delphi Survey; selecting high impact/high probability events; assessing the interrelationships between events; assessing the impact of critical trends and high probability/high impact events on the institution; developing possible scenarios of possible futures faced by the college; analysing the scenarios; developing strategic options; incorporating strategic options into strategic management; and additional steps, such as establishing the program structure, gaining organizational acceptance, developing a scanning taxonomy, and identifying and tapping information resources. Appendices contain \"Prospects for the Future: Some Possible Trends Which May Impact Education,\" a notebook of articles and information suggesting possible future events; ED QUEST forms; a Delphi questionnaire; and a scenario for the future of the hypothetical college. QUEST is an environmental scanning technique that is designed to assist with organizational strategies by keeping adheres to change and its implications. Different steps involved in this technique are as follows: 95 CU IDOL SELF LEARNING MATERIAL (SLM)

 The process of environmental scanning starts with the observation of the organization’s events and trends by strategists.  After observation, important issues that may impact the organization are considered using environment appraisal.  A report is created by making a summary of these issues and their impact.  In the final step, planners who are responsible for deciding the feasibility of the proposed strategy, review reports. The contemporary business world is full of uncertainties. The future has become even less predictable than before. Underlying this uncertainty are certain fascinating dimensions that can lead to either success or failure. A careful analysis and understanding of the future uncertainty and its related aspects can be of great importance to the company. The company needs to be well aware of its strengths and weaknesses in order to reap the benefits of the future opportunities and save itself from the future threats. Planning is the most important tool in helping company for the same. There may be several ways in which an organization can undertake planning process though the steps of the process may remain the same. Various types of planning are: Corporate and functional planning, Strategic and tactical planning, Long-term and Short-term planning, Proactive and reactive planning and Formal and informal planning. SWOT analysis is performed as a part of Strategic planning process, which is a part of Corporate planning. SWOT analysis is definitely a long-term, proactive and formal planning. Corporate planning is the planning for the entire organization as a whole. The top-level management undertakes it and the decision taken thereby affects the entire organization. This determines the long-term objectives of the organization as a whole and then generates plans to achieve these objectives keeping in mind the possible changes in the environment in future. Because of its long-term orientation, corporate planning is also used a synonym of long-term planning. In fact, corporate planning is divided into strategic and operational or tactical planning. Strategic planning is the process of deciding on the long-term objectives of the organization keeping in mind the future changes, defining the resources required to attain these objectives and defining resource policy concerning the acquisition of resources, its use, and disposition. In this manner strategic planning encompasses all the functional areas of business. It is affected on the other hand by the changes in the environmental factors and so it involves an analysis of the environmental factors, it is normally undertaken for a long-term. Strategic planning undertaken at the business unit level is known as the ‘Business unit strategic planning’. Multi-product, multi geographical area organizations create divisions in the form of various strategic business units. Because each product/market segment served in unique, the company may create an SBU for each of them. Thus different SBUs are involved in distinct strategic business area serving distinct segment of the environmeExample of ETOP Analysis Lets take the example of the environment analysis of Hindustan Aeronautics Limited (HAL) Variable Opportunity Threat Economic Infrastructural development is enhanced. This development includes power supply, transport 96 CU IDOL SELF LEARNING MATERIAL (SLM)

and internal consumption Resource constraints. nt. Following is the business unit strategic planning process. Example: The horizontal integration, the vertical integration, and the global product strategy. 5.4 SUMMARY  Many companies believe they can win by performing the same activities more effectively than their competitors; but competitors can quickly copy a operationally effective company using benchmarking and other tools, thus diminishing the advantage of operational effectiveness. Porter defines strategy as “the creation of a unique and valuable position involving a different set of activities.” A company can claim that it has a strategy when it “performs different activities from rivals or performs similar activities in different ways.\" Companies such as IKEA, Southwest Airlines, Dell Computer, Saturn, and Home Depot run their businesses much differently from their competitors; and these competitors would find it hard to copy and synchronize all the different activities that a strategically differentiated company carries out  Once the business unit has developed its principal strategies, it must workout detailed support programs. A great marketing strategy can be sabotaged by poor implementation. If the unit has decided to attain technological leadership, it must plan programs to strengthen its R & D department, gather technological intelligence, develop leading-edge products, train the technical sales force, and develop ads to communicate its technological leadership.  A problem statement is usually one or two sentences to explain the problem your process improvement project will address. In general, a problem statement will outline the negative points of the current situation and explain why this matters.  An opportunity statement is a carefully crafted explanation of the current undesirable situation, its impacts, and the ideal state you prefer instead. Clearly state what situation you’re dealing with, why it’s a problem, and what your ideal state would be.  Problems Are Given To You For A Purpose; They Are Opportunities in Disguise, Thank God For Them! The workplace is full of problems and managers are expected to be effective problem solvers. To move from negative emotions to productive problem solving, managers have to make a subtle change in their thinking.  A business opportunity involves sale or lease of any product, service, equipment, etc. The licensor or seller of a business opportunity usually declares that it will secure or assist the buyer in finding a suitable location or provide the product to the purchaser- licensee. 97 CU IDOL SELF LEARNING MATERIAL (SLM)

 The SWOT analysis is one of the most-used tools by leaders, and with good reason. When used correctly, identifying your strengths, weaknesses, opportunities and threats provides a foundation for effective strategic planning.  SWOT Analysis is a simple but useful framework for analysing your organization’s strengths, weaknesses, opportunities, and threats. It helps you to build on what you do well, to address what you’re lacking, to minimize risks, and to take the greatest possible advantage of chances for success.  50% of the club members are proficient in technology which includes the ability to set up and/or participate in meetings and online training.  The COVID-19 Pandemic which virtually eliminated all group meetings not only threatened club stability but make the recruitment of members much more difficult.  Club leadership makes it a priority to make time available for session on the importance of developing relationships with others.  Club has a history of no inclusion of new members causing them to leave the club. 5.5 KEYWORDS  Sport and recreation events: Sport and recreation events are a service provided and it is reasonable to suggest therefore that all basic costs of the event should be covered by participant fees.  Event Cost: Costs associated with officials needed to run the event may have to be borne by the event organisers.  Event participants: Event participants are generally responsible for their own travel and accommodation costs.  Sponsorship of an event or activity: It can comprise of in-kind support, financial support, or combination of both.  Event Budget: The event budget is a projection (forecast) of the income and expenditure that the event will incur based on plans made and information gathered. 5.6 LEARNING ACTIVITY 1. Create a session on SWOT. ___________________________________________________________________________ ___________________________________________________________________________ 2. Create a survey on ETOP. 98 CU IDOL SELF LEARNING MATERIAL (SLM)

___________________________________________________________________________ ___________________________________________________________________________ 5.7UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What is Opportunities? 2. What is Threats? 3. How to determine the SWOT analysis? 4. Write the full form of ETOP? 5. Write the full form of Quest? Long Questions 1. Explain the Strengths and Weaknesses. 2. Explain the SWOT Analysis for a Successful Event. 3. Illustrate the concept of Quest technique. 4. Illustrate the concept of Quest technique. 5. Examine the limitations of SWOT Analysis. B. Multiple Choice Questions 1. Which of the following SWOT elements are internal factors for a business? a. Strengths and Weaknesses b. Opportunities and Threats c. Strengths and Opportunities d. Weaknesses and Threats 2. Which of the following is false regarding why a SWOT Analysis is used? a. To build on the strengths of a business b. To minimize the weaknesses of a business c. To reduce opportunities available to a business d. To counteract threats to a business 3. How often should a SWOT Analysis be performed? 99 a. Only when specific issues need to be addressed CU IDOL SELF LEARNING MATERIAL (SLM)

b. At least once per year c. Only when the business starts d. Every 3-5 years 4. Which of the following could be strength? a. Weather b. A new international market c. A price that is too high d. The location of a business 5. Which of the following could be a weakness? a. A developing market such as the Internet b. Competitors with access to better channels of distribution c. Poor quality of goods and services d. Special marketing expertise Answers 1-a, 2-c, 3-b, 4-d, 5-c 5.8 REFERENCES References book  Humphrey, Albert (December 2005). \"SWOT Analysis for Management Consulting\"(PDF).  Blake, Martin; Wijetilaka, Shehan (26 February 2015). \"5 tips to grow your start-up using SWOT analysis\". Sydney.  Dess, Gregory (2018). Strategic Management. United States: Textbook references  Armstrong, M. A handbook of Human Resource Management Practice (10th edition) 2006, Kogan Page, London  Westhues, Anne; Jean Lafrance; Glen Schmidt (2001). \"A SWOT analysis of social work education in Canada\". Social Work Education.  Cyert, Richard M. 1993. Organizations, decision making and strategy: Overview and comment. Strategic Management Journal. 100 CU IDOL SELF LEARNING MATERIAL (SLM)